| Show EQUITABLE DIRECTORS TO ACCOUNT FOR ACTIONS state of new york files suit against society and its officers alleging violation of trust new york july 31 an action waa instituted today by state attorney general julius M mayor in the supreme court of kew york county in the name of the of the state of new york against the equitable life assurance society and ltv officers directors and members of the executive and finance committee al of whom are named in aha complaint the defendants fend ants are the equitable life As society of the united states and james W alexander louis fitzgerald chauncey M depew henry C denting cornelius N bliss georgo II 11 squire thomas J jordan charles S smith valentine P snyder alvan W krech william alexander john J me cook ganiey B forgan C ledyard blaar brayton melville E ingalls jamaca H hyde alexander J cas salt jacob H james J mil T jefferson cooledge alfred M vanderbilt der bilt john jacob aster william C van home gage E tarbell mariln hughitt charles B alexander thomas cuyler marcallus hartley bodge jospeh F de navarre brad lah johnson joseph P lowe john A stewart erward H harriman lavt P morton august belmont darius 0 molln hobert T lincoln georgo J gould john sloane george T wll son thomas T william H henry V alexander henry C falck samuel H inman henry C Haar sUch david H and henry R Win A week ago betho the papers acro completed edward II 11 harriman on the eve ot his for japan accepted services of the summons in the proposed action and today many the other defendants including james H hyde wera served through their private counsel the defendants are allowed twenty days from the time ot service to file their answers the complaint contains twenty one sections and covers thirty three pages ot typewritten matter refers to the frick committee report and tho investigation ti made by superintendent of insurance hendrecks it la based on information and belief and attorney general mayor in his prayer to tho court says that the action wa brought on behalf of the people of the state of new york in the public interests and pursuant to the provisions of law tie therefore asks First That the defendants each of them other than the defendant the equitable life assurance of the united states account for official conduct in the management and disposition ot and prop erty committed second that the individual delen cants anal each of them be compelled to pay the defendant the equitably life assurance society any gonei and tho value of any property they or any of them have acquired tc themselves or transferred to othera or lost or wasted by a violation ol 01 tho duties third that any defendant or deafen danta now director or directors or of fleer in tho defendant upon proof of misconduct be removed and that a new election be held by the board of the defendant society purely authorized to hold same in to cupply the vacancy or vacancies vre abed by the removal fourth that the net surplus of defendant society after deducting a sufficient cover all outstanding risks and obligations be paid to or credited to or applied for the benefit of the present in equitable proportion in accordance with the charter and with the law five that the plaintiff hato such other further relief as may bo just equitable and profitable the complaint charges that tho individual defendants disregarding their duty to the society of which they were directors negligently improperly and improvidently performed such dutley and have habitually and continuously done or suffered to be done wrongful illegal and improper acts whereof the defendant society has suffered great loss and damage tb individual defendants are further charged with having acquired to themselves or caused or permitted to bo transferred to others in violation of their duties money property and the value of property to the defendant society section 10 of the complaint deals with tho lease of premises in new york to the mercantile safe deposit company the rental of which is declared to have been inadequate and the terms of the lease greatly to the disadvantage of tho equitable society furthermore that james H hyde jas W alexander cage B tarbell and other defendants were directors in the mercantile safe deposit company and thereby derived a profit in violation of their duty to the equitable society referring to the purchase of the capital stock of he missouri safe deposit company tor which the equitable paid for each par value the eleventh section of the complaint declares that the received but a nominal rent tor the premises occupied by the sate deposit company that at the time of the stock purchase 1410 shares out of a total of 2000 were owned by james H hyde and the remainder by others ot the individual defendants some of whom were officers in the safe deposit company and in the equitable furthermore that at the time of the purchase the safe deposit company had no assets beyond the lease and good will of the business by virtue of the lease the matter of loans to agents which were assigned to the commercial trust company of philadelphia is set forth the charge being made that for the money advance I 1 on such assignments five per cent interest was paid while the trust company at the same time held large sums of the socie tys money for which it paid but three per cent interest referring to the merger in 1892 of the western national bank of the city of new york io which the equitable was tha owner of shares with the national bank of the united states of new york the complaint saya the society received 70 in cash and in stock of the consolidated bank in exchange for each par value of the stock in the western national bank making a total amount received for each share the market value of chat the urns was from to per share A schedule 0 the salaries paid dur ing the baat five years to the principal officers of the society is appended to the complaint which declares such salaries to have been largely in excess 0 the value of the services of too per sons named and that tha payment of such salaries resulted in substantial docs to it is also charged that in addition to the salaries referred to the individual defendants as officers members of committees trustees or agents per the defendant society to pay to many of the above named officers and directors and to others large and unwarranted sums as expenses incurred by such persons in the of the society and said sums were paid without sufficient vouchers without proper proof of their amounts and without it being properly shown that the said defendant society in any way by such expenditures waa legally or properly chargeable therewith the complaint also charges that the defendants wrongfully caused tho defendant society and a number of other societies and corporations in which the defendant society was largely a stockholder and in which some of said individual defendants were also stockholders to pay large sums of money to themselves or to some of their number and to other persona un detho guise of salaries and fees for attending to their duties as officers and directors and members of committees of defendant society and of several other societies and corpora alons especial mention Is roade ot the receipt by mr of salaries aggregating annually from the equitable mercantile and commercial trust companies in all of which tho equitable ut Is largely interested allegations is also made of the pay ment ot illegal excessive pensions to various persons and of the payment of excessive improper and unwarranted sums to various attorneys and coun at law tho aggregate amount of which far exceeded and was entirely disproportionate to the services ren tiered ot the loan to ahe dopak improvement company tahe complaint charges that the defendants improperly jm providently and wasteful procured and permitted the defendant society to loan the sum of to the de pew improvement company a corporation doing business in the state of new york in which company the defendants fend ants chauncey M depow and others of the individual defendants were stockholders which loan of was made upon grossly inadequate security and which property securing said loan was appraised in 1901 by the insurance department of the stale of new york at the sum of that said improvement company subsequently became insolvent and the property which secured said loan was bid in at foreclosure sale tor about thereby resulting in a great waste and loss of the property of the defendant society that the referee deed for said prop eray was not recorded by said defend ant society until january 13 1805 anc that in the meantime no proceedings were taken to the judgment foi the deficiency thereon and the same has ever since remained due and un paid dupew and others of the individual defendants agreed with th defendant society that they would sav said defendant society harmless fron loss by reason of said loan if said so clety would refrain from recording said deed and from enforcing said deficiency judgment that said society did refrain but said defendants have neglected and refused 0 o pay the amount of said loaves said society had so suffered it Is further charged that the dp fondants fond ants improperly and improvidently permitted the society or a number of years past to keep during almost the whole of each year excessive unnecessary and unwarranted sums of money op deposit wilh the national bank of commerce new york the mercantile trust company of new york the equitable trust company of new york commercial trust company philadelphia and at least nineteen other banks and trust companies in some or all of which the individual defendants or set of them were stockholders or officers which sums were deposited at inadequate rates of interest instead of investing them in proper and more remunerative form sot investment and permitted said defendant tv regularly tor a number of years past to conceal this fact and mislead and deceive the policy holders of tha society in respect therein by squally on december to loaning approximately on collateral security which said loans have been regularly called in on january ard 3rd or january and the funds redeposit ed in the repositories depositories deposit ories from which they had been temporarily withdrawn for this purpose after reciting that the society has at the end of each year caused a balance to be struck purporting to show the net surplus earned during the preceding year the complaint declares that the defendants have tailed to divide among the policy holders an equitable share of the net surplus at the I 1 alon of each five years as provided by the socie tys charter the complaint continues plaintiff further alleges that the rules and regulations adopted and heretofore acted upon by the defendant society and its officers with the approval and consent of the socie tys directors for tho ascertainment of the equitable share of the surplus due to each policy bolder were and are incorrect illegal and improper and that of the surplus now held or purporting to be held by the defendant society as shown by its statements a sum approximating Is held by the society in which said sum the present policy holders in violation of the law and the express terms of tho charter would have no interest under said rules and regulations that the defendant society and the individual defendants a officers and directors thereof have held and reported in the reports to the tax corn 0 the city of new york that the entire surplus belonged to the policy holders that the present policy holders of tho defendant society ara entitled to the whole amount to cover all out standing risks and other obligations in accordance with the charter and are entitled to have an equitable share of said net surplus credited to or pad to or applied for the benefit of each policy holder in accordance with the charter and wath law |
